The two sides have also signed an agreement on a line of credit worth US$ 250 million, which was finalized during the visit of President Ram Baran Yadav to India. This credit will be utilized in upgrading and strengthening existing power transmission lines and also for the construction of new transmission lines. [break]
Similarly, a memorandum of understanding has been signed on health assistance for goiter control.
However, the much-awaited Double Taxation Avoidance Agreement (DTAA) could not be signed. A DTAA between the two neighbors would embody modern principles for creating a better investment environment and reducing the cost of doing business. The DTAA remained a debated issue during talks here. India wanted to add one more clause in the draft DTAA that the Nepal cabinet had endorsed. The current draft of the agreement was cleared by the cabinet almost eight months ago during Jhalanath Khanal´s tenure as prime minister.
India sent the additional clause to Nepal last week and it was not added to the original draft. India´s concern was finally addressed during the PM´s meeting with Indian Finance Minister Pranab Mukherjee Friday.
However, Mukherjee will be coming to Nepal within a month to sign the DTAA once the differences are sorted out.
"Mr Mukherjee will reach Nepal soon to conclude the DTAA," Finance Minister Barshaman Pun said, adding that the reason for not signing the DTAA was that "it has not been endorsed by the Indian cabinet."
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Likewise, Nepal got no concrete assurance over Bhattarai´s economic wish-list forwarded to New Delhi before his arrival here. The Indian side only said that it will look into Nepal´s request positively. The wish-list included a credit line of US$ 1 billion for the construction of the Kathmandu-Tarai fast track, the construction of 53 bridges along the Hulaki road under Indian grant, and establishing of six premier management and technical institutes, among other things.
The billion-dollar line of credit was to be provided at an interest rate of 1.75%.
PM-Manmohan Talks
During bilateral talks between the two prime ministers, PM Baburam Bhattarai has significantly proposed the formation of an eminent persons´ group consisting of four people from each country to review and look into the entire gamut of Nepal-India relations including the 1950 treaty.
The proposal was accepted by the Indian side and both countries have agreed to form such a group, which will have one year to make its recommendations to the governments.
Sources present at the talks also said that Indian PM Manmohan Singh expressed India´s commitment to help Nepal´s peace process and wished for an early conclusion of constitution drafting. He, however, also discussed India´s security concerns with Prime Minister Bhattarai.
During the function held at Hyderabad House, PM Bhattarai said that the discussions during the visit will be a pointer to better understanding and increased cooperation between the two countries.
Prime Minister Bhattarai also held a half-hour one-to-one meeting with the Indian prime minister.
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